1. For the purposes of this ECM Notice -
1.1 A non-resident controlled company(hereinafter referred to as NRCC) means acompany in Malaysia where -
1.1.1 More than 50% of its shareholding is held by non-residents and/or NRCCs;
1.1.2 It is a branch of a company which is incorporated outside Malaysia;
1.1.3 The majority shareholding is held by residents, but the ultimate right ofcontrol is held by non-residents and/or NRCCs; or
1.1.4 Although the ultimate right of control is held by residents, the majorityshareholding is held by non-residents and/or NRCCs.
Notwithstanding the above, the Controller may, if he deems fit, direct that aparticular company be designated as NRCC. Where doubt exists as to whether a companyis a NRCC, the ruling of the Controller shall be sought, giving details of the shareholdingby residents, NRCCs and non-residents, residential status of the members of the boardof directors and positions held by them and any other relevant information.
1.2 shareholding means ownership of issued shares with voting rights.
1.3 trade financingﾓ includes facilities to guarantee payment for the purchaseof goods.
1.4 NRCC includes the NRCC group comprising the holding companies and subsidiariesin Malaysia.
2. The Controller hereby gives permission to a resident to issue guarantees onbehalf of a NRCC, other than guarantees which are included in the definition of tradefinancing.
3. The Controller hereby also gives permission, subject to the conditions in paragraph8, to a resident to extend credit facilities to a NRCC -
3.1 Any amount in Ringgit or foreign currency for short-term trade financing wherethe tenure of the credit is less than 12 months; and
3.2 Up to an aggregate limit of RM10 million in Ringgit or foreign currency forany other credit facility;
Provided for paragraphs 3.1 and 3.2 -
I) The credit facilities in foreign currency are extended by a licensed bank ora licensed merchant bank.
ii) In the case of credit facilities extended by banking institutions, at least60% of short-term trade financing and 60% of other types of credit facilities, areextended by Malaysian-owned banking institutions.
4. A banking institution which is a NRCC is exempted from the requirements ofthis ECM Notice.
5. The prior permission of the Controller is required for a resident to extendcredit facilities which do not comply with the provisions in paragraph 3 to a NRCC.
6. Where the prior permission of the Controller is required, inter-alia, the followingcriteria will be considered -
6.1 The credit facility is for productive purpose.
6.2 The NRCC has a domestic debt (inclusive of the new credit facility) to eligiblecapital funds ratio not exceeding 3:1. For purposes of computing the domestic debtto eligible capital funds ratio -
domestic debtﾓ means the aggregate of all credit facilities, excluding
- short-term trade financing where the tenure of credit is less than 12 months (suchas letters of credit, trust receipts, bankers acceptances, export credit refinancing,and bills discounting facilities); and
- guarantees eligible capital funds means the sum total of -
- paid-up capital;
- preference shares (excluding redeemable preference shares issued to residents whichare not ordinary shareholders);
- share premium;
- accumulated profits (less losses);
- concessional credit facilities from non-resident shareholders; and
- revaluation reserves for public-listed companies.
7. The definition of eligible capital funds will be applied in the computationof the domestic debt to eligible capital funds ratio only when the NRCC applies forextension of time to comply with any existing domestic debt to eligible capital fundsratio or for new credit facilities.
8. The main office/head office of a participating financial institution is requiredto report credit facilities extended to NRCCs in the Borrower Loan Information System.
9. Where prior permission of the Controller is required, the application shallbe submitted by the NRCC to the Controller, providing information and documents asper the Appendix.
1. Name of NRCC.
2. Shareholding structure i.e. name and residential status of ordinary and preferenceshareholders, including the beneficial shareholders if the registered shareholdersare nominees and amount of shares held (identify holder of 5% or more of total equity)and for preference shareholders state whether they have voting rights.
3. Members of board of directors, including residential status and position heldby them.
4. Nature of borrower's business and if products are for export, state percentageof export.
5. Amount of total credit facilities for which approval is sought, i.e. type andcurrency of facility (e.g. term loan, overdraft, revolving credit, bankers acceptanceetc. State if facility is combined or omnibus).
6. Purpose of credit facilities - (summary of proposed capital expenditure andother assets to be financed, distinguishing between payment for import and localmaterials and imposed sources of financing).
Sources and uses of funds (RM million)
Uses of funds
e.g.
Plant and Machinery 6.0 Land and building 7.0 Working capital 5.0 Contingencies 1.0-------------------------------------- 19.0
Sources of funds
e.g.
Share capital 6.0 Foreign loans 3.0 Domestic borrowing(etc.) 10.0-------------------------------------- 19.0
If large commercial property is being purchased, state if Foreign Investment Committeehas given approval.
7. Details of any benefits expected to accrue to the national economy as a resultof the borrowing (e.g. increased exports, saving of imports, etc). State averageannual foreign exchange income.
8. Borrowerﾕs (including holding company and subsidiaries) limits of existingcredit facilities (both in Ringgit and foreign currency) obtained and current amountoutstanding.
9. Borrower's latest audited statement of accounts.